Unassociated Document


    EMPLOYMENT
      AGREEMENT

    


    


    THIS
      AGREEMENT is made this 22nd day of July, 2008 (the “Effective Date”), by and
      between PAYLESS SHOESOURCE, INC., a Missouri corporation (“PSS”), and LUANN VIA
      (“Executive”).

     

    WITNESSETH:

     

    WHEREAS,
      PSS conducts its business in part through various direct and indirect
      subsidiaries and affiliates (PSS and its parent, subsidiaries and affiliates
      being collectively referred to as “Payless”).

     

    WHEREAS,
      Payless is one of the leading retail companies in the United States with self
      service shoe stores throughout the United States, Puerto Rico and the U.S.
      Virgin Islands, Guam, Saipan and Canada.

     

    WHEREAS,
      Executive recognizes and acknowledges that Executive's position with PSS
      provides Executive with access to Payless’ proprietary, trade secret and other
      confidential information relating to its business.

     

    WHEREAS,
      Payless has expended a great deal of time, money and effort to develop and
      maintain its proprietary, trade secret and confidential information; this
      information, if misused or disclosed, could be very harmful to Payless' business
      and its competitive position in the marketplace. 

     

    WHEREAS,
      Executive recognizes and acknowledges that if Executive's employment with PSS
      and all other Payless-related entities ceases, Payless needs certain protections
      to ensure that Executive does not misuse or disclose any proprietary, trade
      secret or confidential information entrusted to Executive during the course
      of
      employment or take any other action which could result in a loss of Payless'
      good will that was generated on Payless' behalf and at its expense, and, more
      generally, to prevent Executive from having an unfair competitive advantage
      over
      Payless.

     

    WHEREAS,
      Executive desires to be employed by PSS, to be eligible for potential
      compensation increases, and to be given access to proprietary, trade secret
      and
      confidential information of Payless necessary for Executive to perform
      Executive’s job, but which Payless would not make available but for Executive’s
      signing and agreeing to abide by the terms of this Agreement. 

     

    In
      consideration of the mutual promises and agreements herein contained, and other
      good and valuable consideration the receipt and sufficiency of which are hereby
      acknowledged, the parties agree as follows:

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


     

    1. Term.
      This
      Agreement shall commence on the Effective Date and shall expire on July 22,
      2010
      (the “Contract Term”), unless sooner terminated in accordance with Paragraph 8
      hereof. Beginning on July 23, 2008, the Contract Term will be automatically
      extended each day by one day, until either party delivers to the other written
      notice of non-renewal. 

     

    2. Duties.
      

     

    (a) Executive
      shall perform all duties incident to the position of President and Chief
      Executive Officer of PSS, as well as any other duties as may be assigned from
      time to time by PSS, and agrees to abide by all the by-laws, policies,
      practices, procedures and rules of Payless. Executive agrees to use Executive’s
      best efforts, energies and skill to perform the duties and responsibilities
      of
      the position, and to this end will devote Executive’s full time and attention
      exclusively to the business of PSS and/or such other Payless entities to which
      Executive may be assigned or transferred. Executive may be assigned or
      transferred to another management position with PSS or Payless, as designated
      by
      Payless, so long as such assignment or transfer does not result in a material
      diminution in responsibilities or duties. This Agreement shall remain in effect
      and shall apply to Executive, without any need for re-execution, regardless
      of
      the Payless parent, subsidiary, affiliate or business division for which
      Executive works or provides services, or the duties to which Executive may
      in
      the future be assigned. 

     

    (b) At
      all
      times during the Contract Term, Executive will maintain Executive’s residence
      within reasonable access to the Corporate Headquarters of PSS or any division,
      parent, subsidiary or affiliate to which Executive may be assigned.

     

    3. Compensation;
      Benefits.

     

    (a) Base
      Salary.
      PSS
      agrees to pay Executive a base salary during the Contract Term at the annual
      rate of $675,000, less applicable taxes and withholding, payable in equal
      bi-weekly installments, which annual rate will be subject to an annual review,
      which may result in an increase or decrease in salary (where such decrease
      is i)
      not material; or ii) is occurring as part of an overall reduction in
      compensation also applied to other senior executives of Payless as a result
      of a
      decrease in business performance by PSS or one of its business units), during
      PSS’ regularly scheduled review time. 

     

    (b) Incentive
      Plans.
      Executive shall be eligible to participate in such annual and long-term plans,
      programs or arrangements established from time to time for senior executives
      of
      PSS (the "Incentive Plans"), in accordance with and subject to all of the terms
      and provisions of such Incentive Plans and such other incentive plans of Payless
      as may be appropriate in light of any reassignment or transfer of Executive
      under Paragraph 2(a) above. 

     

    (c) Expenses.
      PSS
      shall reimburse Executive for all items of normal business expense incurred
      by
      Executive as an employee of PSS in accordance with its reimbursement policies
      in
      effect from time to time.

     


    
      
        
        

      

      
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    (d) Benefits.
      PSS has
      adopted certain welfare benefit plans (including, but not limited to, medical,
      prescription drug, dental, disability, and life insurance) and has established
      certain perquisites which may, from time to time, confer rights and benefits
      on
      Executive in accordance with their terms. PSS may also, in the future, adopt
      additional welfare benefit plans, establish additional perquisites, or amend,
      modify or terminate any of the aforesaid welfare benefit plans and arrangements,
      all in accordance with their terms and in accordance with applicable law. Unless
      effectively waived, Executive shall be entitled to whatever rights and benefits
      which may be conferred on Executive, from time to time in accordance with the
      terms of such plans and arrangements and such other benefits of Payless as
      may
      be appropriate in light of any reassignment or transfer of Executive under
      Paragraph 2(a) above. 

     

    (e) Stock.
      Executive will be eligible for future grants of restricted stock, stock-settled
      stock appreciation rights, stock options, or performance units, if any, as
      may
      be granted under the terms of the Collective Brands, Inc. 2006 Stock Incentive
      Plan, or any successor plan, in accordance with the criteria established from
      time to time by the Compensation Committee of the Collective Brands, Inc. Board
      of Directors. 

     

    (f)
       Automobile
      Allowance.
      Executive shall be eligible for an automobile allowance as determined by PSS
      (or
      such other Payless entity as may be appropriate) from time to time, paid monthly
      upon written request. The portion of the allowance that is substantiated as
      business-related will not be considered taxable. 

     

    4. Noncompete.

     

    (a) At
      all
      times during the Contract Term, and for a period of two (2) years immediately
      following Executive’s last day of employment with any Payless entity, Executive
      will not directly or indirectly: 

    


    (i) own,
      manage, operate, finance, join, control, or participate in the ownership,
      management, operation, financing, or control of, or be a partner in, be employed
      by, or act as an advisor, consultant, agent, officer, director, or independent
      contractor for, or otherwise have an interest in, a Competing Business;
      or

    


    (ii) solicit,
      induce, hire, or attempt to aid or assist any person or entity other than
      Payless in soliciting for employment, offering employment to, or hiring, any
      employee of any Payless entity or any person who, at any time during the 12
      months prior to the solicitation, was employed by any Payless
      entity.

    


    Nothing
      in this Paragraph 4(a) shall prevent Executive, however, from performing
      Executive’s duties and responsibilities for PSS or any other Payless entity. In
      addition, ownership of an investment of less than the greater of $25,000 or
      1%
      of any class of equity or debt security of a Competing Business shall not
      constitute ownership or participation in ownership in violation of Paragraph
      4(a)(i). Further, Paragraph 4 shall not apply in the event of a Change of
      Control (as defined in Section 1.8 of the Collective Brands, Inc. Supplementary
      Retirement Account Plan, as amended and restated January 1, 2008). 

    


    (b) The
      term
      "Competing Business" shall include, but not be limited to:


    
      
        
        

      

      
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    (i) any
      retail business with gross sales or revenue in the prior fiscal year of more
      than $25 million (or which is a parent, subsidiary, affiliate or joint venture
      partner of a business with gross sales or revenue in the prior fiscal year
      of
      more than $25 million) which sells footwear or accessories in whole or in part
      competitive to that sold by Payless (“Competitive Footwear”), including, without
      limitation, Wal-Mart Stores, Inc.; Sears Holdings Corporation; Target
      Corporation; Foot Star, Inc.; DSW, Inc.; Aldo Shoes, Inc.; Ross Stores, Inc.;
      T.J. Maxx; Off-Broadway Shoes; Burlington Coat Factory Warehouse Corporation;
      Gennesco Inc.; Brown Shoe Company, Inc.; Shoe Carnival, Inc.; Kohl’s
      Corporation; Liz Claiborne, Inc.; Big 5 Sporting Goods Corporation; J.C. Penney
      Company; Shoe Zone, Limited; Bata, Limited; Shoes.com; and Zappos.com, within
      10
      miles of any Payless store or the store of any wholesale customer of Payless
      in
      the United States, or anywhere in any foreign country in which Payless has
      retail stores or wholesale customers;

    


    (ii) any
      franchising or wholesaling business with gross sales or revenues in the prior
      fiscal year of more than $25 million (or which is a subsidiary, affiliate or
      joint venture partner of a business with gross sales or revenues in the prior
      fiscal year of more than $25 million) which sells Competitive Footwear at
      wholesale to franchisees, retailers or other footwear distributors located
      within 10 miles of any Payless store or the store of any wholesale customer
      of
      Payless in the United States, or anywhere in any foreign country in which
      Payless has retail stores or wholesale customers; 

    


    (iii) any
      footwear manufacturing business with gross sales or revenue in the prior fiscal
      year of more than $25 million (or which is a subsidiary, affiliate or joint
      venture partner of a business with gross sales or revenue in the prior fiscal
      year of more than $25 million) which sells Competitive Footwear to retailers,
      wholesale customers, or other footwear distributors located within 10 miles
      of
      any Payless store or the store of any wholesale customer of Payless in the
      United States, or anywhere in any foreign country in which Payless has retail
      stores or wholesale customers (including, without limitation, Nine West Shoes;
      Dexter Shoe Company; Liz Claiborne, Inc.; Wolverine Worldwide, Inc.; Timberland
      Company; Nike, Inc.; Reebok International, Ltd.; K-Swiss, Inc.; and
      adidas-Salomon AG); or

    


    (iv) any
      business which provides buying office services to any store or group of stores
      or businesses referred to in Paragraph 4(b).

    


    (c) Background
      of non-compete restrictions:

    


    (i)
      In
      connection with its business, Payless (including PSS) has expended a great
      deal
      of time, money and effort to develop and maintain its proprietary, trade secret
      and confidential information; this information, if misused or disclosed, could
      be very harmful to Payless' business and its competitive position in the
      marketplace; 

    


    (ii)
      Executive recognizes and acknowledges that Executive’s position with PSS
      provides Executive with access to Payless’ proprietary, trade secret, and
      confidential information; 

    


    (iii)
      Payless compensates its employees to, among other things, develop and preserve
      goodwill and relationships on Payless' behalf and to develop and preserve
      business information for Payless’ exclusive ownership and use; 


    
      
        
        

      

      
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    (iv) long-term
      customer and supplier relationships often can be difficult to develop and
      require a significant investment of time, effort and expense; and

    


    (v) Executive
      recognizes and acknowledges that if Executive’s employment hereunder were to
      cease, Payless would need certain protections in order to ensure that Executive
      does not appropriate or use any confidential and proprietary trade secret
      information entrusted to Executive during the course of employment or take
      any
      other action which could result in a loss of Payless’ goodwill that was
      generated on Payless’ behalf and at its expense, and, more generally, to prevent
      Executive from having an unfair competitive advantage over Payless.

    


    (d) Reasonableness
      of non-compete restrictions. Executive acknowledges and agrees that the
      restrictions in Paragraph 4 are reasonable and that such restrictions are
      enforceable in view of the background for the non-compete restrictions set
      forth
      in the Paragraph 4(c), and in view of, among other things, the
      following:

    


    (i) the
      markets in which Payless operates its businesses;

    


    (ii) the
      proprietary, trade secret, and other confidential business information to which
      Executive has or will have access;

    


    (iii) Executive's
      training and background, which are such that neither Payless nor Executive
      believes that the restraint will pose an undue hardship on the Executive or
      prevent Executive from finding suitable non-competitive employment during the
      specified period of non-competition;

    


    (iv) a
      Competing Business could benefit greatly if it were to obtain Payless'
      proprietary, trade secret, and other confidential business
      information;

    


    (v) Payless
      would not have adequate protection if Executive is permitted to work for any
      Competing Business in violation of this Agreement since Payless would be unable
      to verify whether its proprietary, trade secret, and other confidential business
      information was being disclosed or misused;

    


    (vi) the
      limited duration and limited scope of, and the limited activities prohibited
      by,
      the restrictions in Paragraph 4; and

    


    (vii) Payless'
      legitimate interests in protecting its proprietary, trade secret, and other
      confidential business information, goodwill and relationships.


    
      
        
        

      

      
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    (e) If
      Executive violates Executive’s obligations under Paragraph 4, then Payless
      (including PSS) shall be entitled to all legal and equitable rights and remedies
      under this Agreement, including all of its rights and remedies referred to
      in
      Paragraph 10 of this Agreement. Further, any time in which Executive is in
      violation of Executive’s obligations shall not count toward satisfying the time
      during which any injunctive restriction shall apply. For example, if Executive
      were to join a competitor in violation of the restrictions in Paragraph 4(a)
      and
      work for such competitor for one month before a court enjoined such violation,
      then the two year time period of the restriction would begin when such
      injunction were issued; the one month in which Executive violated the
      restriction would not count toward the time that the restriction
      applies.

    


    (f) Executive
      agrees to provide a copy of this Agreement (with Paragraph 3(a) redacted, if
      Executive so desires) to any prospective employer Executive contacts during
      or
      after termination or resignation of employment. Executive authorizes Payless
      to
      contact Executive’s future employers and other entities with which Executive has
      any business relationship to determine Executive’s compliance with this
      Agreement or to communicate the contents of this Agreement to such employer
      and
      entities. Executive releases Payless, its employees and agents, from all
      liability for damages arising from such contact or communications.

    


    5. Confidential
      Information.

     

    (a) Executive
      will not, at any time during the Contract Term or after termination of
      employment, directly or indirectly use, make known, disclose, furnish, or make
      available Confidential Information (as defined herein), other than in the proper
      performance of Executive’s duties contemplated herein.

     

    (b) “Confidential
      Information” means any non-public information pertaining to Payless’ business
      disclosed by Payless to Executive, or developed or learned by Executive during
      the course of Executive’s employment with any Payless entity, including, without
      limitation, any confidential information and documents concerning Payless’
customers; customer, supplier, and vendor lists; terms, conditions and other
      business arrangements with vendors, suppliers, or factories; contract factory
      lists; manufacturing plans; advertising, marketing plans and strategies; pricing
      information; profit margins; seasonal plans, goals, objectives and projections;
      compilations, analyses and projections regarding Payless' businesses, product
      segments, product lines, suppliers, sales and expense information; patent
      applications (prior to their being public); salary, staffing and employment
      information (including information about performance of other executives);
      operations manuals; computer software applications and other programs;
      techniques, methods, styles, designs and design concepts, business plans,
      knowledge and data related to processes, products, compounds, compositions,
      formulae, lasts and molds, and "know-how," techniques or any technical
      information not of a published nature relating, for example, to how Payless
      conducts its business; 

     

    (c) Executive
      acknowledges that Payless’ business is intensely competitive and that, by virtue
      of Executive’s employment, Executive will have access to and knowledge of
      Confidential Information. Executive also agrees that the misuse or direct or
      indirect disclosure of Confidential Information to existing or potential
      competitors of Payless would place Payless at a competitive disadvantage and
      would harm and damage Payless’ business. 

     


    
      
        
        

      

      
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    (d) During
      Executive's Payless-related employment and thereafter, Executive will: (i)
      notify and provide Payless immediately with the details of any unauthorized
      possession, use or knowledge of any Confidential Information, (ii) assist in
      preventing any reoccurrence of such possession, use or knowledge, and (iii)
      cooperate with Payless in any litigation or other action to protect or retrieve
      Confidential Information.   

     

    6. Payless
      Intellectual Property.
      (a)
      Executive hereby assigns to Payless all of Executive’s rights, title, and
      interest (including but not limited to all patent, trademark, copyright and
      trade secret rights) in and to all Work Product (as defined herein). Executive
      further acknowledges and agrees that all copyrightable Work Product prepared
      by
      Executive within the scope of Executive’s Payless-related employment are “works
      made for hire” and, consequently, that Payless owns all copyrights thereto. For
      purposes of this Agreement, “Work Product” shall include but is not limited to,
      all literary works, software, documentation, memoranda, photographs, artwork,
      sound recordings, audiovisual works, ideas, designs, inventions, discoveries,
      creations, conceptions, improvements, processes, algorithms, and so forth which
      (i) are prepared or developed by Executive, individually or jointly with others,
      during Executive’s Payless-related employment, or within six (6) months
      thereafter, whether or not during working hours, and (ii) relate to or arise
      in
      any way out of (1) current and/or anticipated business and/or activities of
      Payless, (2) Payless’ current and/or anticipated research or development, (3)
      any work performed by Executive for Payless, and/or (4) any information or
      assistance provided by Payless, including but not limited to Confidential
      Information.

     

    (b)
       Executive
      shall promptly disclose to Payless all Work Product. All such Work Product
      is
      and shall forthwith become the property of Payless, or its designee, whether
      or
      not patentable or copyrightable. Executive will execute promptly upon request
      any documents or instruments at any time deemed necessary or proper by Payless
      in order to formally convey and transfer to Payless or its designee title to
      such Work Product, or to confirm Payless or its designee’s title therein, and it
      order to enable Payless or its designee to obtain and enforce United States
      and
      foreign Letters Patent, Trademarks and Copyrights thereon. Executive will
      perform Executive’s obligations under this Paragraph 6 without further
      compensation, except for reimbursement of reasonable out-of-pocket expenses
      incurred at the request of Payless. 

     

    7. Disability.
      If
      Executive becomes Disabled and remains continuously so Disabled for a period
      of
      180 days, then Payless' obligations under this Agreement may be terminated
      by
      notice in writing to that effect during the continuance of such Disability,
      such
      termination to take effect the later of (a) the last day of the month during
      which such notice is given or (b) the last day of such 180 day period. If
      Executive has made a previous election to participate in the Payless ShoeSource,
      Inc. Long-Term Disability Plan, or successor plan, (subject to the terms and
      provisions of that plan), then the terms of that plan shall apply. "Disability"
      or "Disabled" shall mean disability as defined under the Payless ShoeSource,
      Inc. Long-Term Disability Plan applicable to Executive. 

     


    
      
        
        

      

      
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        8.
Termination.

         

      

    

    (a) For
      Cause; Voluntary Resignation; Death; Disability.
      PSS (or
      such other Payless entity as may be appropriate in light of any reassignment
      or
      transfer) may terminate Executive’s employment for Cause at any time upon
      written notice to Executive, with immediate effect. Executive may voluntarily
      resign from PSS (or such other Payless entity) at any time upon 30 days written
      notice to PSS (or such other Payless entity); provided, PSS (or such other
      Payless entity) may require Executive to cease working earlier than the noticed
      termination date and agrees to continue to pay Executive her basic compensation
      and maintain her employee benefits through the noticed termination date. If
      Executive’s employment terminates during the Contract Term by reason of
      Executive’s death or Disability, by Executive’s voluntary termination of
      employment, or by PSS (or such other Payless entity) for Cause:

    


    (i) Executive’s
      basic compensation and employee benefits shall cease on the date of such
      termination or resignation, except as otherwise provided in any applicable
      employee benefit plan or program; 

    


    (ii) Executive
      shall be entitled to receive Executive’s base salary through that date of
      termination or resignation (including payment for any accrued but unused
      vacation), payable within the first pay period following termination or
      resignation; 

    


    (iii) Executive
      will be reimbursed, in accordance with Payless policy, for any business expenses
      properly incurred by Executive prior to the date of termination or resignation;
      

    


    (iv) Executive
      shall be entitled to any equity-linked awards, consistent with the terms of
      the
      applicable award agreements; 

    


    (v)
      Executive shall be entitled to such portion of any long-term cash incentive
      compensation as shall be payable under the terms of the Incentive Plans;
      and

    


    (vi) Executive
      will have the opportunity to continue coverage in Payless’ medical, dental, and
      vision plans in which Executive is participating on the date of termination
      or
      resignation, through and subject to the terms of COBRA. 

    


    (b) Without
      Cause by Payless; With Good Reason by Executive.
      PSS (or
      such other Payless entity as may be appropriate in light of any reassignment
      or
      transfer) may terminate Executive’s employment Without Cause at any time upon
      written notice to Executive, and Executive may terminate Executive’s employment
      for Good Reason at any time upon written notice to PSS (or such other Payless
      entity as may be appropriate in light of any reassignment or transfer). If
      Executive’s employment is terminated Without Cause or for Good Reason:


    


    (i) Executive’s
      basic compensation and employee benefits shall cease on the date of such
      termination, except as otherwise provided herein or in any applicable employee
      benefit plan or program; 

    


    (ii) Executive
      shall be entitled to receive Executive’s base salary through that date of
      termination (including payment for any accrued but unused vacation);


    


    (iii) Executive
      will be reimbursed, in accordance with Payless policy, for any business expenses
      properly incurred by Executive prior to the date of termination;



    
      
        
        

      

      
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    (iv) Provided
      that Executive is not in violation of, and does not violate, any of Executive’s
      obligations under Paragraphs 2, 4, 5, and 6 of this Agreement, Executive shall
      be entitled to a severance payment in an amount equal to two (2)
      times Executive’s
      then current base salary at the time of termination of employment, payable
      in a
      lump sum, less applicable withholdings and deductions; 

    


    (v)
      Executive shall be entitled to the amount of any annual award payable to
      Executive under the Incentive Plans for the fiscal year in which Executive’s
      employment is terminated, prorated by the number of days Executive is actively
      employed in that fiscal year divided by the number of days in the fiscal year,
      and payable at the time and pursuant to the terms of such Incentive Plans,
      less
      applicable withholdings and deductions; provided, however, such Annual Award
      must be paid no later than 2 1⁄2 months from the end of Payless’ fiscal year in
      which Executive’s employment terminates; 

    


    (vi)
      Executive shall be entitled to any equity-linked awards, consistent with the
      terms of the applicable award agreements; 

    


    (vii)
      Executive shall be entitled to such portion of any long-term cash incentive
      compensation as shall be payable under the terms of the Incentive Plans;


    


    (viii)
      Executive will receive a special payment which is the equivalent, before taxes,
      to the portion paid by Payless towards 18 months of COBRA coverage under
      Payless’ medical, dental and vision plans, to the extent Executive is
      participating in such plan(s) on the date of termination; and. 

    


       (ix) Executive
      shall receive executive-level outplacement services to be coordinated by the
      Human Resources Department. Executive must commence utilizing the outplacement
      services no later than 30 days following the date of termination or the right
      to
      such services will cease. Provided, however, the services in no event will
      extend beyond 15 months following the date of termination. 

    


    (x) If
      at the
      time that Executive terminates employment Executive is a “key employee” within
      the meaning of IRC Section 409A and regulations issued thereunder, then, if
      necessary to comply with 409A, payment to Executive shall not be made until
      six
      (6) months after termination of employment and such payment shall be made in
      a
      lump sum, less applicable withholdings and deductions.

    


    (xi) A
      resignation for Good Reason shall be treated for all purposes under any PSS
      plans or benefits the same as a termination Without Cause.

    


    (c) "Cause"
      means:

     

    (i) an
      act of
      fraud, embezzlement, or theft against Payless, or any other violation of the
      law
      that is harmful to Payless’ operations (excluding minor traffic violations), or
      conviction of a felony; 

     

    (ii) grossly
      negligent disclosure of Confidential Information contrary to the policy of
      Payless; 


    
      
        
        

      

      
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    (iii) material
      breach of any of the terms of this Agreement, abuse of Executive’s position for
      personal gain, or breach of Executive’s duties to Payless and its shareholders;


    


    (iv) engagement
      in any competitive activity which would constitute a breach of Executive's
      duty
      of loyalty or of Executive's obligations under this Agreement; 

    


    (v) grossly
      negligent breach of any policy of Payless including those contained in Payless’
Code of Ethics; 

    


    (vi) the
      conviction of Executive, or a plea of guilty or nolo
      contendre,
      to any
      crime involving moral turpitude; 

    


    (vii) the
      willful and continued failure by Executive to substantially perform Executive's
      duties with Payless (other than any such failure resulting from Executive's
      incapacity due to physical or mental illness); or

    


    (viii) the
      willful engaging by Executive in conduct which is demonstrably or materially
      injurious to Payless, monetarily or otherwise. 

    


    For
      purposes of this Paragraph 8(c), an act, or a failure to act, shall not be
      deemed "willful" or "intentional" unless it is done, or omitted to be done,
      by
      Executive in bad faith or without reasonable belief that Executive's action
      or
      omission was in the best interest of Payless, as determined by the Chief
      Executive Officer of Collective Brands, Inc. Failure to meet performance
      standards or objectives, by itself, will not constitute cause.

     

    Payless
      shall be entitled to suspend Executive with pay while investigating any conduct
      that could constitute Cause. A termination for Cause under this Paragraph
      8(c)(ii), (iii), (iv), (v), (vii) or (viii) can not occur until and unless
      the
      Executive is afforded an opportunity to be heard on the issue at an in-person
      meeting with the Chief Executive Officer, where Executive has been notified
      reasonably in advance of the agenda and timing of the meeting.

     

    (d) “Good
      Reason” means:

     

    (i) the
      relocation of Payless’ headquarters more than 75 miles from its location on the
      Effective Date if such relocation increases Executive’s one-way commute from
      Executive’s principal residence by more than 75 miles;

     

    (ii) a
      material diminution in Executive’s primary duties and responsibilities except to
      the extent such diminution in duties and responsibilities occurs as the result
      of an investigation of Executive’s for “Cause” termination; or

     


    
      
        
        

      

      
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    (iii) any
      material decrease in the aggregate of compensation and benefits unless part
      of
      an overall reduction in other compensation and benefits also applied to other
      senior executives of Payless as a result of a decrease in business performance
      by PSS or one of its business units.

     

    (e) Executive
      agrees that, in addition to any other remedies, and to the extent permitted
      by
      law and or plan, Payless shall be permitted, as part of the computation of
      any
      final amount due to Executive as compensation, wages, bonus, or otherwise,
      and
      before any such amount shall be due and owing, to reduce any amount which
      Payless may otherwise owe to Executive by any unpaid amount which Executive
      owes
      to Payless.

     

    (f) Executive’s
      obligations under Paragraph 2 shall cease on the effective date of such
      resignation or termination for whatever cause(s), Executive’s obligations under
      the Agreement, including Paragraphs 4, 5, and 6, shall remain in full force
      and
      effect, and Payless shall be entitled to all legal and equitable rights and
      remedies under this Agreement, including all of its rights and remedies
      referenced in Paragraph 10 of this Agreement. 

    


    (g) Upon
      resignation or termination of employment due to whatever cause(s), Executive
      shall return all property of Payless which is then or thereafter comes into
      Executive’s possession, including but not limited to documents, contracts,
      agreements, plans, photographs, books, notes, records, computer diskettes and
      tapes, and any other electronically stored data and all copies of the foregoing,
      as well as an other material or equipment supplied by Payless, keys, credit
      cards, and equipment, and delete from Executive’s own computer or other
      electronic storage medium any Confidential Information. Executive shall also
      sign all documents necessary for Executive's immediate resignation as an officer
      of Payless. 

    


    (h) The
      payments and other benefits provided in Paragraph 8 are not made pursuant to
      any
      welfare benefit or pension plan as defined by the Employee Retirement Income
      Security Act of 1974. 

    


    9. Release
      and Waiver of Claims.
      The
      parties agree that payment of severance and other benefits provided in Paragraph
      8 shall constitute payment in full for all compensation due to Executive, are
      in
      lieu of any benefits which Executive may otherwise be entitled under the Payless
      ShoeSource, Inc. Severance Plan, and constitute full and complete discharge
      of
      any and all claims which Executive might otherwise have or purport to have
      with
      respect to any period subsequent to the effective date of such resignation
      or
      termination, for the payment of compensation, or any additional benefits
      provided by Payless to Executive. Provided, however, the payments of the amounts
      specified in Paragraph 8(b)(iv),(v),(viii) and (ix) are contingent upon
      Executive signing a Separation Agreement and General Release, prior to
      payment.


    
      
        
        

      

      
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    10. Remedies.
      Executive acknowledges and agrees that the restrictions in this Agreement are
      reasonable in order to protect Payless’ expectations and rights under this
      Agreement and to provide Payless with the protections it needs to, among other
      things, safeguard its Confidential Information. Executive agrees that any breach
      or threatened breach of Paragraphs 4, 5, or 6 of this Agreement by Executive
      will cause immediate irreparable injury to Payless, for which an award of
      damages alone may be inadequate. Therefore, Payless shall be entitled, in
      addition to any other legal or equitable right or remedy it may have, to
      temporary, preliminary, and permanent injunctive relief restraining such breach
      or threatened breach of Paragraphs 4, 5, or 6 of this Agreement. Moreover,
      any
      award of injunctive relief shall not preclude Payless from seeking or recovering
      any lawful compensatory damages which may have resulted from a breach of this
      Agreement, including forfeiture of any payments not yet made and return of
      any
      payments already received by Executive, to the extent ordered by a court of
      competent jurisdiction. 

    


    11. Representations
      of Executive.
      Executive hereby represents and warrants that the execution and delivery of
      this
      Agreement and Executive’s Payless-related employment do not violate any previous
      employment agreement or other contractual obligation of Executive with any
      other
      party. Executive has not disclosed, and will not disclose, to Payless any
      information, whether confidential, proprietary or otherwise, which Executive
      is
      not legally free to disclose. Executive shall abide by the terms of any
      nondisclosure or confidentiality agreement between Payless and any other
      parties.

    


    12. Written
      Waiver.
      In
      order for this Agreement to become valid and binding, you must deliver to
      Payless prior to August 1, 2008, a valid written waiver from your prior employer
      confirming the agreement of such employer not to enforce its post-employment
      non-competition restrictions against you during your employment with any Payless
      entity. 

    


    13. Severability.
      The
      invalidity or unenforceability of any provision, or portion thereof, of this
      Agreement shall not affect the remainder of that provision or any other
      provision of the Agreement. If any clause is deemed overly broad, illegal,
      invalid, or unenforceable with respect to the duration of time or the geographic
      scope, then such clause shall automatically be amended to the extent (but only
      to the extent) necessary to make it sufficiently narrow in scope, time and
      geographic area so that it shall be enforceable, and that it is not illegal,
      void or unenforceable. All other remaining terms and provisions shall remain
      in
      full force and effect.

     

    14. Entire
      Agreement.
      This
      Agreement, and the Offer Letter dated June 17, 2008 (attached hereto as Exhibit
      “A”), constitute the entire understanding and agreement between the parties and
      supersede all other employment agreements or other arrangements, whether oral
      or
      written, with respect to the subject matter contained herein. This Agreement
      may
      be executed in counterparts, in which case each of the two counterparts shall
      be
      deemed to be an original and the final counterpart shall be deemed to have
      been
      executed in Topeka, Kansas.

     

    15. Amendment,
      Breach and Waiver.
      This
      Agreement may not be changed, amended, or modified in any manner except by
      a
      written instrument in writing signed by both the parties hereto, except that
      if
      IRC Section 409A
      is
      determined to have applicability to any portion of this Agreement, with the
      effect that Executive shall have no right to any payment hereunder prior to
      six
      months from employment termination, this Agreement may be amended by Payless
      to
      comply with IRC Section 409A. The failure of either party to enforce at any
      time
      any of the provisions of this Agreement shall in no way be construed to be
      a
      waiver of any of such provision, or of the right to such party thereto to
      enforce each and every such provision in the event of a subsequent
      breach.

     


    
      
        
        

      

      
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    16. Successors
      and Assigns.
      This
      Agreement and/or the rights hereunder shall be freely assignable by PSS or
      Payless. This Agreement shall inure to the benefit of, and be binding upon,
      any
      entity which shall succeed to Payless’ business. Being a contract for personal
      services, neither this Agreement nor any rights hereunder, shall be assigned
      by
      Executive, and any such attempts or purported assignment shall be null and
      void.
      Any payment owed to Executive but not paid to Executive as a result of death
      shall be paid to Executive’s estate. 

     

    17. Third
      Party Beneficiary.
      Each
      PSS direct and indirect parent, subsidiary and affiliate is a third party
      beneficiary of this Agreement with respect to, among other things, the
      protection of each’s interest in its Confidential Information, customer
      goodwill, relationships and contacts, and each has the full rights and power
      to
      enforce the rights, interests and obligations under this Agreement of or
      relating to each’s interest.

     

    18. Governing
      Law; Choice of Forum.
      This
      Agreement, and any questions relating or regarding the validity, interpretation,
      or performance, shall be governed by and construed in accordance with the laws
      of the State of Kansas, without reference to the conflicts or choice of law
      principles thereof. Payless and Executive agree that any action to enforce
      any
      provision of this Agreement shall be filed and litigated exclusively in any
      state court or federal court located in the City of Topeka, Kansas, or in
      Shawnee County, Kansas. Payless and Executive hereby waive any defense of lack
      of personal jurisdiction or venue in such courts and agree that process may
      be
      served, if made upon PSS or Payless, upon Payless’ registered agent (with a copy
      to Payless’ General Counsel), or if made upon Executive, at Executive’s last
      known address on the records of Payless.

     

    BY
      SIGNING THIS AGREEMENT, EXECUTIVE HEREBY CERTIFIES THAT EXECUTIVE (A) HAS
      RECEIVED A COPY OF THIS AGREEMENT FOR REVIEW AND STUDY BEFORE SIGNING IT; (B)
      HAS READ THIS AGREEMENT CAREFULLY BEFORE SIGNING IT; (C) HAS HAD SUFFICIENT
      OPPORTUNITY TO REVIEW THE AGREEMENT WITH ANY ADVISOR WHICH EXECUTIVE MAY DESIRE
      TO CONSULT, INCLUDING LEGAL COUNSEL; (D) HAS HAD SUFFICIENT OPPORTUNITY BEFORE
      SIGNING IT TO ASK ANY QUESTIONS EXECUTIVE HAS ABOUT THIS AGREEMENT AND HAS
      RECEIVED SATISFACTORY ANSWERS TO ALL SUCH QUESTIONS; AND (E) UNDERSTANDS
      EXECUTIVE'S RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT.

     

    IN
      WITNESS WHEREOF, the parties have executed this Agreement as of the date first
      above written.

     

    
      	 	 	 
	 	 
	 
 	 
 	EXECUTIVE
 
	 	By:  	/s/ LuAnn
              Via
	 	
              

            
	 	 


    

     

    
      	 	 	 
	 	PAYLESS
              SHOESOURCE, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Jay
              Lentz
              
	 	
              

            
	
              Its:
                 

            	/s/
              Senior Vice President-Human Resources


    

    


    


     

    


     

     


    
      
        
        

      

      
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